Online lending company E-Loan has secured $5 million in new financing from Charles Schwab Corporation through the purchase of a convertible note. The convertible note bears interest of 8% per annum, expires on January 19, 2003, and is convertible into common stock at $1.06 per share.
Steve Scheid, vice-chairman of Charles Schwab & Co, Inc., says: "We have been pleased with E-Loan's progress since the start of our strategic alliance a year ago. This new round of financing is intended to allow E-Loan to continue to grow and execute its vision."
The convertible note will offset $5 million of the $7.5 million general line of credit provided by Chris Larsen, E-Loan's chairman and CEO, on April 3, 2001. The general line of credit provided by Larsen is currently $2.5 million.
In a separate transaction, E-Loan and Schwab have agreed to exchange 1,389,000 warrants on E-Loan's common stock with a strike price of $5.00. This is in place of the 6,600,000 warrants with a strike price of $15.00 that had previously been issued at the start of the strategic alliance.